Trustee

May Share

The Wealth

Southeast Bank Stock

Could Reclaim Value

If you're an investor who papered your bathroom with Southeast Bank shares after federal regulators seized the Miami bank in 1991, you might want to reconsider.

The trustee of the bank's estate said on Thursday the stock may be worth something, but only if people who own the shares don't start trading them again.

William A. Brandt Jr., who recently got a $152 million payment from federal deposit insurance regulators, outlined a case for a full recovery of some $425 million owed to Southeast creditors.

Such an outcome would be a huge coup and is still quite speculative, Brandt admitted. But he said he has been forced to start thinking about the interests of Southeast stockholders as a result.

About 34 million common shares were outstanding when the bank's stock trading was suspended by the Securities and Exchange Commission in 1991. Brandt said he has heard of the stock trading hands for 6 to 10 cents a share, although trades are hard to confirm.

If Southeast were to become solvent, its biggest asset, according to Brandt, would be about $375 million in tax loss credits that it could use to offset any tax on profits.

But if more than 50 percent of the stock were to change hands among holders who own blocks of 5 percent or more, the tax loss credit could be lost, he said. The Internal Revenue Service could deem it a change in ownership, Brandt said.

On Thursday, Brandt said he got an order from a federal judge that freezes trading in Southeast stock.

``All kinds of shenanigans could be occurring,'' he said.

Brandt's case for full recovery depends heavily on a $500 million suit filed against First Union Corp., which bought Southeast from the Federal Deposit Insurance Corp. In a memo filed in federal court in Miami on Thursday, First Union said it acted properly in buying the bank and using information given to it by Southeast.

In order for Southeast Bank stock to have value, its bankruptcy would have to be converted from a Chapter 7 liquidation to a Chapter 11 reorganization, and Brandt said he has no plans to do that yet.